There are many cases about the appointment of administrators, not so many about terminating their appointment. Re Central Properties Holdings Ltd (In Administration)  EWHC 829 (Ch) is one.
The administrators had applied for, and been granted, an extension of the administration to enable them to put in place a company voluntary arrangement; at the same time they had sought orders providing for the termination of the administration pursuant to para 79 of Sch B1 Insolvency Act 1986, conditional upon the successful completion of the proposed CVA, and their discharge, conditional upon termination of the administration.
An administrator appointed out of court under paras 14 or 22 of Sch B1 may terminate an administration under para 80 of Sch B1 by filing notice with the court and the registrar of companies where he or she is of the opinion that the purpose of the administration has been sufficiently achieved. That method of termination was not available in this case because the administrators had been appointed by the court. Where the relevant conditions are satisfied, an administrator appointed by a court order may move a company from administration to creditors’ voluntary liquidation under para 83, or from administration to dissolution under para 84, without a further court order (see Re Ballast plc (in administration)), but otherwise needs a court order to bring the administration to an end (under para 79 of Sch B1). In this case, the administrators did not propose to exit via liquidation or dissolution but, subject to successful completion of the CVA, contemplated a solvent exit from administration. They invited the court to make a prospective order under para 79 of Sch B1 providing for the administration to terminate automatically, conditional on successful completion of the CVA, anda conditional order providing for their discharge from liability under para 98 of Sch B1.
In a reserved judgment, Deputy ICC Judge Curl KC accepted that it was clear from Hildyard J’s judgment in Re Lehman Brothers International (Europe) (in administration) that there was no jurisdictional impediment to granting the relief sought, but he noted that the judge in that case had decided against making an order for discharge at the stage he was asked to because of the possibility of unexpected delays in the administration, preferring instead to stand the application over to be dealt with at a later date on paper by reference to the administrators’ final progress report.
The deputy judge took the same cautious course for similar reasons.
First, although it was anticipated that the administrators would have little further to do as administrators once the CVA had gone through, they remained officers of the company (pursuant to para 69 of Sch B1) and had power to manage it: it was not under the control of its directors (see para 64 of Sch B1); indeed one of the reasons the administrators gave for continuing the administration while the company was in CVA was precisely to maintain that position vis-à-vis the directors. While the CVA was expected to lead to a distribution within six months of approval, the administrators anticipated the possibility of delay, for example if a creditor challenged the adjudication of their debt, a possibility that was real in this case. Secondly, similar considerations applied to discharge from liability. As the deputy judge put it:
“I do not consider it to be desirable to have the question of [the] Administrators’ discharge available to become tangled up in a dispute in a CVA in this way. None of this is necessarily likely to happen but the fact that it is conceivable is sufficient, absent a crystal ball, to persuade me that this is not an appropriate case to make an innovative form of conditional order.”
In the circumstances, he said, it would be necessary for the administrators to return to court to seek an order for their discharge if the CVA was successfully completed. There was no suggestion that there was any benefit in making a stand-alone conditional order providing for the administration to be brought to an end under para 79 without also making an order for the administrators’ discharge, so an application for both heads of relief would have to be made after completion of the CVA. It is made clear in the judgment that the reason for the administrators seeking the kind of “rolled up” relief for which they were applying was to save the costs of another hearing, a point that the judge plainly found laudable but insufficient to persuade him, rightly, it is submitted, not to adopt the same cautious approach that Hildyard J took in the Lehman Brothers case.